Ombudsmen See More Complaints Against NBFCs

The major areas of complaints under the Banking Ombudsmen Scheme (BOS) pertained to ATM/debit cards, mobile/electronic banking, and credit cards, which collectively accounted for 42.74 per cent of the total number of complaints as compared to 44.65 per cent in the previous year, according to a press release issued by the Reserve Bank of India (RBI). Under the Ombudsman Scheme for Non-Banking Financial Companies (OSNBFC), major areas of complaints were with regards to non-adherence to Fair Practices Code, non-observance of RBI directions, and levy of charges without prior notice, accounting for 75.32 per cent of the complaints as compared to 63.23 per cent in the previous year.

On Wednesday, January 12, 2022, RBI released its annual ombudsman report for the nine-month period from July 1, 2020 to March 31, 2021 as the financial year has been changed to April-March from July 2020 onwards. The annual report covers the activities under BOS, 2006; OSNBFC, 2018; and Ombudsman Scheme for Digital Transactions, 2019 (OSDT), along with major developments and the way forward in the area of consumer protection.

The volume of complaints received under all the three ombudsman schemes increased by 22.27 per cent on an annualised basis and stood at 3,03,107 during the reported period. The BOS accounted for 90.13 per cent of total complaints (i.e. 2,73,204) received under the three ombudsman schemes. The number of complaints received under OSNBFC and OSDT stood at 8.89 per cent and 0.98 per cent, respectively, of the total number of complaints.

“The overall disposal rate improved to 96.59 per cent from 92.52 per cent in the previous year, despite higher volume of complaints, which can be attributed to the end-to-end digitization of complaint processing in CMS. Of the maintainable complaints, 72.67 per cent were resolved by mutual agreement, i.e., through intervention of the ombudsman offices / conciliation / mediation efforts,” the central bank stated in its report.

New Ways To Redress Complaints

During the year 2020-21, Consumer Education and Protection Department (CEPD) undertook the following initiatives for strengthening the grievance redress system. A comprehensive framework on strengthening of grievance redress mechanism in banks, comprising of enhanced disclosures on customer complaints, recovery of cost of redress by ombudsmen from the banks for the complaints received in excess of the respective peer group averages and annual review of grievance redress mechanisms of the banks was instituted.

Apart from education and awareness campaigns undertaken through print and electronic media, substantial groundwork was undertaken to integrate the three ombudsman schemes into one (launched on November 12, 2021), set up the Centralised Receipt and Processing Centre along with a Contact Centre, revamp CMS in the wake of the integrated ombudsman, and take initiatives to improve effectiveness in resolution of consumer complaints.

For this financial year, consumer awareness and financial education initiatives will be intensified and CMS capabilities will be enhanced to further improve the quality and speed of complaint disposal. Annual assessments of banks will be undertaken to strengthen grievance redress mechanism in banks and review the framework. Regulatory guidelines on consumer protection and customer service will be further consolidated.